U.S. business optimism drops in fourth quarter

Grant Thornton International Business Report cites economic uncertainty as the number one constraint to business growth in coming year.
By Modern Materials Handling Staff
January 22, 2014 - MMH Editorial

Optimism for the nation’s economic outlook among U.S. business leaders plummeted 16 percentage points in fourth quarter 2013 to a net balance of 36% according to the latest data from the Grant Thornton International Business Report (IBR), a survey of 3,300 business leaders in 45 countries.

Hiring expectations in the United States declined for the first time in the past year, with a net balance of 38% of business leaders foreseeing an increase in hiring during the coming year, down from 42% the previous quarter. In addition, net 52% of business leaders expect profits to grow, a slight decline from 54%  the previous quarter and a substantial increase from 28% a year ago. U.S. business growth expectations actually improved, with net 65% of businesses expecting to see revenues climb during the next 12 months, up from 50% in third quarter 2013 and up from 38% from the same period last year. However, a net balance of 37% of U.S. businesses leaders cite economic uncertainty as the number one constraint to growing their operations in the next 12 months.

“It’s clear that the recent gridlock in Washington is significantly contributing to the lack of confidence in, and optimism about, our economy among the nation’s business leaders,” said Stephen Chipman, chief executive officer of Grant Thornton LLP. “Our nation’s political leaders were able to reach a budget agreement, which will likely avert another costly government shutdown and extend the sequester for the next two years. However, they must now turn their attention to embracing a long-term debt ceiling solution combined with comprehensive tax and entitlement reforms that would provide a level of economic certainty that businesses are desperately seeking.”

The notion that the government shutdown affected optimism about the economy correlates with other recent research from Grant Thornton LLP, which indicated that 60% of CFOs believe the state of the U.S. economy will remain the same or worsen during the next six months because of similar uncertainty.

The lack of optimism in the U.S. economy is consistent with what is occurring in other global markets. Global business optimism fell to a net balance of 27%, down five percentage points from third quarter 2013. Optimism among Chinese business leaders declined following a 27 percentage-point increase to net 31% in the previous quarter. In fourth quarter 2013, business optimism in the world’s second largest economy fell to a net balance of 22%.

Brazil business optimism also dropped significantly from a net balance of 31% to 10%, a record low for the IBR. Russian optimism declined from a net balance of 19% to just 1%, its lowest since 2011.



Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Seasonally-adjusted (SA) for-hire truck tonnage in March was up 1.1 percent on the heels of a revised 2.8 percent (from 3.1 percent) February decline, with the SA index at 133.5 (2000=100). This is off 0.3 percent from the all-time high for the SA of 135.8 from January 2015 and is up 5 percent annually.

Intermodal volume was up 8.1 percent annually at 280,016 containers and trailers. This outpaced the week ending April 11 at 270,463 and the week ending April 4 at 271,127. AAR said this tally marks the second highest weekly output it has ever recorded as well as the first time container and trailer traffic was higher than carloads for a one-week period.

Ocean cargo carrier service reliability across the three core East-West trades hit a five-month peak in March with an aggregate on-time performance of 64 percent, according to Carrier Performance Insight, the online schedule reliability tool provided by Drewry Supply Chain Advisors.

The Airforwarders Association, which represents more than 360 companies that move air cargo through the supply chain, today applauded an agreement reached by Congressional leaders to advance legislation giving the President authority to conclude key global trade agreements.

Despite great opportunity for growth, the logistics market in Latin America is lagging behind other emerging markets thanks in part to its notoriety for corruption, violence, poor infrastructure and government bureaucracy.

Article Topics

News · Global · Economy · China · Grant Thornton · Brazil · All topics

About the Author

Josh Bond, Associate Editor
Josh Bond is an associate editor to Modern. Josh was formerly Modern’s lift truck columnist and contributing editor, has a degree in Journalism from Keene State College and has studied business management at Franklin Pierce. Contact Josh Bond

Comments

Post a comment
Commenting is not available in this channel entry.